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The Economist explains

How domestic violence affects the economy

A new law in New Zealand aims to provide victims of abuse with a measure of financial security

THE toll of domestic violence is physical and psychological, but it is also economic. Many victims skip work or show up late. Sometimes they (rightly) fear being stalked or killed at their offices. On July 25th New Zealand passed a law giving victims of domestic violence the right to take ten days’ paid leave from work. The goal of the law is to allow them to attend to emergency logistics—moving houses, seeking legal help or changing their contact information—without fear of losing their jobs. How is domestic violence an economic problem? 

The new law has few precendents. The Philippines is the only other country with paid domestic-violence leave, which it enshrined in law in 2004. But a survey in 2015 found that just 39% of Filipino respondents were aware that the law existed, and 26% reported employers reacting negatively to being asked for the leave. Canada offers paid domestic-violence leave in several provinces but not at the national level. Australia’s Council of Trade Unions pushed for similar measures last year, but had to be satisfied with only five days’ unpaid leave, which went into effect on August 1st. That New Zealand’s provision is paid makes a big difference. Research by Women’s Refuge, a charity in New Zealand, found that 60% of people had full-time jobs when their abusive relationships began but half of them were no longer employed as those relationships progressed. Many victims stay with abusive partners at least in part for financial security.

New Zealand’s new law, which passed with 63 votes to 57, is controversial. Victims will not be required to prove that they were abused. Employers, not the government, will pay for their time off. One MP warned the measure might discourage employers from hiring “someone that may present a risk around domestic violence [sic]”. In the absence of data, a proxy can be found across the Tasman Sea: the Australia Institute estimates that only a small number, 1.5% of women and 0.3% of men, would use such a law if it were passed in Australia, amounting to between A$80m and $A120m ($59m-89m) a year nationally. Domestic violence itself costs much more. Around the world the cost of violence against women, taking into consideration direct spending on counselling and health resources as well as projections of lost productivity, adds up to 2% of global GDP. In New Zealand, which has one of the highest rates of domestic violence in the developed world, it drains $2.7bn-4.7bn.

The bill will not prevent violence. It is accompanied by a government-sponsored public campaign in New Zealand. Advocates caution that the law also needs to be combined with training for employers. Whether companies can and are willing to pay up will be what most critics watch as the policy takes effect. If well implemented, it will provide an economic safety net for women as they deal with traumatic situations. As Jan Logie, the politician who proposed the bill, said, “It doesn’t make sense to tell victims we want them to leave and then force them into poverty when they do.”

This article appeared in the Economist Explains section (Aug 2nd 2018)

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